The Price to Value Dilemma

To make a compelling offer, understanding value is crucial. People buy because they believe the value they receive is worth more than what they pay. When the value dips below the price, they stop buying. Lowering the price may seem like a solution, but it is often the wrong decision for a business focused on making money. Instead of competing on price, businesses should focus on increasing the gap between price and value. Lowering the price can only go down to zero, but the value can be infinitely high. Unless a business has a revolutionary cost advantage, it should avoid competing on price. Being the second cheapest in the marketplace offers no strategic benefit, but being the most expensive can.

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